Final Results

Vane Minerals PLC 08 April 2005 8th April 2005 VANE Minerals Plc (AIM: VML) Financial Results for Period Ending December 2004 REPORT HIGHLIGHTS • Listed on AIM in June 2004 raising £3.283m net of expenses • At the end of the financial period, the Group had cash balances of £2.34m • All work programmes are on schedule and under budget • Commenced production on the Diablito gold-silver prospect in Mexico with full capacity production expected to be ahead of schedule during 2005 • Follow-up exploration work at prospective Guadalcazar gold prospect in Mexico significantly progressed • Drilling on Guadalcazar commenced in March 2005 • Option acquired on the Mina Charay gold-silver prospect in Mexico. First drilling results favourable • Uranium prospects identified in the North America. 7 prospects claimed to date with a further 28 under review • Gold and copper targets identified in Paraguay CHAIRMAN'S STATEMENT It gives me pleasure to have this opportunity of reviewing the principal events in the development of VANE Minerals since the company's successful listing on AIM in June 2004. Since that event, I am happy to report that the company's share price has improved strongly in a market in which mining increasingly is playing a pre-eminent role. This encouraging performance continues to be underpinned by the strength of the gold price on international markets. We remain on course with our declared strategy of generating early cash flow from our developing properties. While the thrust of our activities remains our developing gold-silver projects in Mexico, we have additionally made application in recent months for gold-copper prospects in Paraguay and also for uranium licences in North America. The £3.283 million (net of expenses) raised by VANE Minerals on listing in 2004 is being applied to fund the detailed exploration and development of our three main properties in Mexico: Diablito (gold-silver) in Nayarit; Guadalcazar (gold) in San Luis Potosi; and Mina Charay (gold-silver) in the State of Sinaloa. My colleague, Steve Van Nort, has commented further in his report on progress with each of these prospects. Throughout the past year, the company has strived to apply the funds raised in the IPO in an efficient and diligent manner. Consequently, VANE Minerals has managed to accomplish its objectives as set out in the listing prospectus within budget and ahead of schedule and expects to be able to continue to fund its various exploration activities from these resources, until the company becomes cash generative with the development of our Diablito property. Our current cash burn rate is £143,000 per month, and this is expected to be maintained during the first half of 2005 until Diablito reaches full production. At the December 2004 year-end, the group held £2.344 million in cash. One of the pillars of VANE Minerals' strategy has been the continuing access to the extensive database of exploration files of the Freeport-McMoRan Copper and Gold company. The exclusive agreement which we entered with this company was recently extended by a further year to June 2006, and we intend to use this unique resource to identify additional exploration targets in the coming months. This has been a busy year for your company in which a number of milestones have been reached. VANE would like to thank its shareholders for their continued support during this period of build-up towards initial mine production and cash flow generation. Your board believes that, with its exciting portfolio of exploration and development projects, the company is placed now to grow the business substantially and to create sustainable value going forward. MJ Spriggs Chairman CHIEF EXECUTIVE OFFICER'S REPORT We are very pleased and encouraged by the progress that the VANE team has made since the company listed in June of 2004. The two existing properties at the time of the listing are on schedule and below budget as set out in the company's prospectus and new additions to the VANE portfolio are progressing well and show promising potential. Freeport-McMoran Exploration Files We have continued our review of the Freeport-McMoRan Copper and Gold Company's 7000 plus exploration files, in accordance with our exclusive agreement, which was recently extended to 30 June 2006. Targets of interest have been identified and their evaluation is expected to be undertaken in the coming months. Diablito Project The company's Diablito project has been and continues to be a success. The company's plan was to rapidly develop this property in order to give VANE a cash flow and enable the company to be a self-funding exploration company. Up-grading of indicated resource at Diablito was accomplished through a detailed diamond drilling programme which has been reported on in two press releases dated 29 September 2004 and 25 October 2004. New resource estimates developed from the drilling programme are tabulated below: Tons Tons Tons Grade Grade Measured Indicated Inferred Au opt (Gold) Ag opt (Silver) 23,300 11,700 65,000 0.39 42.4 Further up-grading of and expansion of the resource base is anticipated, especially down dip and to the west, with the completion of additional infill and step-out drilling. A mining plan for recovery of the Diablito resource, as outlined during the above mentioned drilling campaign, has been formulated, a contract mining company selected and VANE and the MGA Contratista Minera SA de CV are now in the process of initiating that development plan. First production of ore is now expected in May 2005 with the design capacity of 50 t/d to be achieved two months ahead of the plan as outlined in the budget detailed in the listing prospectus. Guadalcazar Work at the company's Guadalcazar epithermal gold prospect has progressed satisfactorily. VANE has completed a detailed geochemical survey (rock, water and mesquite), geophysical surveys (gravity, magnetics and VLF) and geologic mapping of the limestones surrounding the Guadalcazar basin. Compilation of all this data has identified a number of drill targets which offer the potential of discovering a large hydrothermal gold deposit. Eight targets have been selected to be drilled. The drill is scheduled to be mobilized in late February with drilling, 22 holes budgeted, to commence immediately thereafter. Mina Charay In addition to the above accomplishments the VANE team has secured an option to purchase the Mina Charay gold-silver property located in the State of Sinaloa, Mexico. The Mina Charay project has both the potential for rapid generation of cash flow and the discovery of a large bulk mineable deposit. First phase diamond drilling, 7 holes, has been completed along with a reconnaissance VLF survey, both of which indicate that one or more well-mineralized vein structures occur within the Mina Charay property and are open to the West, along strike and down dip. Paraguay In Paraguay the company has applied for three large concessions in east central Paraguay totalling 3,800 sq kilometres, where at least 22 gold and/or gold/ copper geochemical anomalies have been identified. Work has begun to evaluate these anomalies through more detailed geochemical work, with drilling planned for the future. Uranium Work was initiated in late December 2004, on acquiring potential uranium resources and/or prospects in North America. As of early 2005, 7 targets have been claimed and a further 28 prospects have been identified and are being targeted for acquisition. Some of the prospects are believed to contain indicated resources with uranium grades of around 1% U3O8 or 20 pounds uranium oxide per ton. At present uranium oxide prices of approximately $21.00/pound, the value of ore is over $400/ton. SD Van Nort Chief Executive Officer Enquiries: VANE Minerals plc Seymour Pierce Limited Parkgreen Communications Matthew Idiens Sarah Wharry Justine Howarth / Cathy Malins 020 7667 6322 020 7107 8000 020 7493 3713 CONSOLIDATED PROFIT AND LOSS ACCOUNT for the period ended 31 December 2004 Notes 15 months ended 11 months ended 31 December 2004 30 September 2003 £ £ TURNOVER - - Net operating expenses (637,663) - OPERATING LOSS (637,663) - Interest receivable 41,041 - Interest payable and similar charges (2,071) - LOSS ON ORDINARY ACTIVITIES BEFORE TAXATION (598,693) - Taxation 35,533 - LOSS ON ORDINARY ACTIVITIES AFTER TAXATION 3 (563,160) - LOSS PER SHARE Basic and diluted 2 (0.52p) - The operating loss for the period arises from the group's continuing operations. STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES 15 months ended 11 months ended 31 December 2004 30 September 2003 £ £ Loss for financial period (563,160) - Currency translation losses on foreign currency net (67,404) - investments Total recognised gains and losses for period (630,564) - CONSOLIDATED BALANCE SHEET 31 December 2004 Notes 31 December 2004 30 September 2003 £ £ FIXED ASSETS Intangible assets 11,503,882 - CURRENT ASSETS Debtors 116,093 - Cash at bank and in hand 2,344,253 2 2,460,346 2 CREDITORS: Amounts falling due within one year (66,078) - NET CURRENT ASSETS 2,394,268 2 NET ASSETS 13,898,150 2 CAPITAL AND RESERVES Called up share capital 14,614,382 2 Share premium account - - Profit and loss account (716,232) - EQUITY SHAREHOLDERS' FUNDS 3 13,898,150 2 CONSOLIDATED CASH FLOW STATEMENT for the period ended 31 December 2004 Notes 2004 2003 £ £ Cash flow from operating activities 4a (584,524) - Returns on investments and servicing of finance 4b 38,970 - Capital expenditure and financial investment 4b (381,899) - Acquisitions and disposals 4b 56,594 - CASH OUTFLOW BEFORE MANAGEMENT OF LIQUID RESOURCES AND FINANCING (870,859) - Management of liquid resources 4b (2,285,791) - Financing 4b 3,282,514 2 INCREASE IN CASH IN THE PERIOD 125,864 2 RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS 2004 2003 £ £ Increase in cash in the period 125,864 2 Cash outflow from increase in liquid resources 2,285,791 - Change in net funds resulting from cash flows 2,411,655 2 Translation difference (67,404) - Movement in net funds in the period 2,344,251 2 NET FUNDS AT 1 OCTOBER 2003 2 - NET FUNDS AT 31 DECEMBER 2004 2,344,253 2 Notes to the financial statements, Period ended 31 December 2004' Note 1 BASIS OF PREPARATION The financial information for the year ended 31 December 2004 has not been audited and does not constitute the Company's statutory financial statements within the meaning of S240 of the Companies Act 1985. This preliminary announcement was approved by the Board on 7 April 2005. The statutory financial statements for the year ended 31 December 2004 have not been filed with the Registrar of Companies nor reported on by the Company's auditors. They will be circulated to shareholders in April 2005 and the Annual General Meeting is arranged to take place on 12 May 2005. The comparative results for the year ended 31 December 2003 are an abridged version of the audited financial statements which have been filed with the UK Registrar of Companies and on which the auditors issued an unqualified audit report. Note 2 LOSS PER ORDINARY SHARE The calculation of basic and diluted loss per ordinary share is based on the following loss and number of shares. 15 months 11 months ended ended 31 December 30 September 2004 2003 £ £ Loss for the financial period (563,160) - 2004 2003 No. of shares No. of shares Weighted average number of shares 107,745,590 2 Due to the loss incurred in the period, there is no dilutive effect from the issue of share options. Note 3 RECONCILIATION OF MOVEMENT IN EQUITY SHAREHOLDERS' FUNDS 2004 2003 £ £ Loss for the financial period (563,160) - Issue of shares during the 14,951,198 2 period Share issue costs (422,486) - Exchange rate adjustments (67,404) - Net addition to shareholders' 13,898,148 2 funds Opening shareholders' funds 2 - Closing shareholders' funds 13,898,150 2 Note 4 CASH FLOWS 2004 2003 £ £ a Reconciliation of operating loss to net cash outflow from operating activities Operating loss (637,663) - Increase in debtors 143,063 - Increase in creditors (89,924) - Net cash outflow from operating activities (584,524) - b Analysis of cash flows for headings netted in the cash flow 2004 2003 £ £ Returns on investments and servicing of finance Interest received 41,041 - Other interest paid (2,071) - Net cash inflow from returns on investments and servicing of finance 38,970 - Capital expenditure and financial investment Purchase of intangible fixed assets (381,899) - Net cash outflow from capital expenditure and financial (381,899) - investment Acquisitions and disposals Cash acquired with subsidiary 106,594 - Acquisition of subsidiary (50,000) - Net cash inflow from acquisitions and disposals 56,594 - Management of liquid resources Cash deposited on 7 day deposit (2,285,791) - Net cash outflow from management of liquid resources (2,285,791) - Financing Proceeds from issue of share capital 3,705,000 2 Share issue costs (422,486) - Net cash inflow from financing 3,282,514 2 At Cash-flow Exchange At 1 October 2003 Difference 31 December 2004 £ £ £ c Analysis of net funds £ Cash at bank and in hand 2 125,864 (67,404) 58,462 Cash on deposit - 2,285,791 - 2,285,791 2 2,411,655 (67,404) 2,344,253 d Analysis of the net outflow of cash in respect of the purchase 2004 2003 of subsidiary undertaking: £ £ Cash acquired with subsidiary 106,594 - Acquisition of subsidiary (50,000) - Net inflow of cash in respect of the purchase of subsidiary 56,594 - This information is provided by RNS The company news service from the London Stock Exchange

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